In late 2021, two DeFi DAOs — Fei Protocol and Rari Capital — initiated a merger aimed at creating a powerful DeFi entity. This partnership was highly endorsed by their communities, leading to the establishment of Tribe DAO. However, this initiative failed within nine months.

The failure of Fei-Rari reverberated through the ecosystem, yet it was merely one of many DAO M&As that occurred even in 2021. Other notable cases include Gnosis and xDAI, Aragon and Vocdoni, and Yearn merged with various entities, showcasing the variety of outcomes.

With over 65 deals surfaced since 2020, the current environment for DAO M&As appears increasingly active. Traditional M&A processes are well-established, but DAOs operate in unpredictable terrains, lacking a centralized authority and witnessing varied governance outcomes.

As highlighted in the report on the State of DAO M&A, fluctuating valuations pose challenges, complicating fair acquisition pricing amid regulatory uncertainties. DAOs are shifting strategies by employing token migrations as alternatives to navigate these complexities.

However, it’s crucial to note that not all mergers offer synergy; instead, they may create confusion around governance responsibilities.

Despite the challenges, M&A opportunities for DAOs are anticipated to grow. In order to be successful, DAOs must refine their governance processes and value assessments, and prioritize security to mitigate risks inherent in decentralized operations.

The comprehensive State of DAO M&A report (February 2025) produced by DAOstar, Areta, and Emory University is available here.